GST Suspended? What to do Next?
Updated: Jul 27
The national GST laws have enabled a strong network of compliance. GST laws are regularly amended to ease up the GST regime and make the regulation fair for all. However, simultaneously, the government is also focusing on making the GST taxation laws more stringent than ever before. A failure to comply with GST regulations may lead to the cancellation/suspension of GST registration which one cannot afford to let happen as it is not lawful to make any taxable supply after the suspension of GST Registration. So, let us take a more in-depth look at the reasons and possible measures to help you deal with this GST registration suspension situation.
Reasons behind Cancellation/Suspension of GST Registration
As a taxpayer, you may wonder why a GST registration may be cancelled or fear of getting your registration suspended. However, it is to be noted that no registration is cancelled without valid reasons. So, it becomes very important to be extra-cautious to watch out for any possibility of GST Registration cancellation.
Here are some of the reasons why your GST registration may be suspended-
1: In case there is a change in the constitution of your business.
In case a business is discontinued, transferred, merged or closed down.
It may be suspended if the taxpayer fails to abide by the provisions of the CGST Act.
The taxpayer may voluntarily apply for a cancellation of registration, and in that case, the proper officer puts the GST into suspension.
If the GST registration was obtained using fraudulent methods, the officer has the right to suspend the registration.
Registration also gets suspended if it is found out that the business is being operated from a place other than the one mentioned.
As per GST regulations, a failure to start the business within six months of GST registration may lead to a cancellation/suspension of the registration.
If the taxpayer is found to be issuing invoices without supplying goods or service
If the taxpayer fails to furnish valid bank account details, the registration can be suspended after a warning.
If a person who is covered under the composition scheme has not furnished his returns for three continuous tax periods
In case a person conducting business, other than under the composite scheme, has not furnished the returns for a period of six months.
Understanding suspension of GST registration
An authorised officer can only suspend registration if he has reasons to consider that the registration is liable to be cancelled. The officer may offer a warning or a chance to rectify the situation before the GST is suspended.
The taxpayer is intimated through Form GST REG-31 regarding discrepancies. The form also mentions that GST may be cancelled if the taxpayer does not provide a valid explanation. Further, the officer can still order a suspension if, in his opinion, the explanation is found to be incomplete or unsatisfactory.
Consequences of GST Registration Suspension
In case a GST registration of a person is suspended, the business entity may not be able to pay taxes or file for a GST return. If you are under the category of the taxpayer and your GST registration has been suspended, you must immediately contact an assessing officer and request for activation of GSTIN. A failure to do the same in time can lead to cancellation of registration and further penalties due to non-compliance with GST regulations.
What to do after Suspension of GST Registration?
In case the taxpayer has not voluntarily applied for cancellation of registration and yet have received a notice, here are some of the things you can consider-
1: On receiving a notice for discrepancies
If a taxpayer receives a notice for discrepancies, he needs to furnish a reply to the tax authority within one month of receiving the notice. The reply should include details of all the corrective measures and actions taken to comply with the non-compliances and the reasons as to why the registration should not be cancelled.
2: On receiving a notice of cancellation
In this scenario, one needs to reply to the tax officer using Form GST Reg 18 online through the official GST portal within one month of getting the notice.
3: Receiving a notice due to non-filling of returns
Non-filing of returns is the most common scenario. If the notice for suspension or cancellation of registration is issued on the ground of non-filing of returns, the said person may file all the due returns and submit the response.
How To Activate suspended GST Registration?
As a registered taxpayer, you can apply for reactivation of your GST registration as per GST laws within 30 days. But this can only be done when an authorised GST officer suspends the registration. A voluntarily suspended registration cannot be revoked under any circumstances. There is no doubt that the rules for suspension provide relief to taxpayers to some extent.
The government has streamlined the process, but it is still advisable to take the help of a professional for revoking the suspended GST registration. A consultation with a GST professional or a certified CA can help you stay under compliance and get possible remedies to deal with the suspension of GST registration without going through much trouble.